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Blogging the 2016 ASSA conference. Gender, fertility, globalisation and all that

Two of the papers presented at the ‘Inside Institutions: Feminist Perspectives‘ at the 2016 ASSA conference leave me puzzled. Both have highly interesting topics: the influence of globalisation on the gender gap and even fertility. But both are disappointing. Look here for Alicia Girón and Eugenia Correa (Gender Gaps Post-Crisis: Women Workers, Employment and Precarity), look here for Mizuki Komura and Hikaru Ogawa (Globalization, Gender Empowerment and Fertility).

Let me explain:

  1. Economics is mostly about the monetary economy. But the ‘non-monetary’ economy is at least as important. not just in the moral ‘Dr. Phil’ sense (raising children is the most important work there is (full disclosure: I agree)). But also when we look at labour or capital in a more strict sense. The number of hours spent on homework is more or less at par with the number of paid hours which we work. And as the recent national accounts capital stock data detail for every country for which they are available: houses (including land) are our most import capital good.
  2. This means that one has to have a good idea of ‘laws and institutions’ which are governing our monetary economy as well as the different ‘laws and institutions’ governing the non-monetary economy – ‘laws and institutions’ including gender relations and the like.
  3. Time spent in ‘market activities’ (including government jobs) is (as households need money as well as capital goods which are purchased with money) complementary as well as competing with time spent on ‘household production’ (including raising children). But decisions on what to do are and can’t be based upon ‘market prices’ as these prices, which are ex ante by definition, simply do not exist for household production. Assuming that people do this assumes that they know things which the do not know.

Taking these points into account we can state the next things: Giron and Correa start well:

“From the perspective of post Keynesian theory, a monetary production economy involves the production and the circulation spheres as the foundation of exchange relations. The latter is compounded by aggregate demand for the procurement of such labor that, through public policies, define the interrelation between the spheres of macroeconomy and microeconomy. Therefore, those decisions made within the macroeconomic sphere will then be related to the family unit through public policies, the mesoeconomy. Within households, monetary incomes from paid work persist as the main axis of economy; but one should also take into account the care of social reproduction, which main axis is such unpaid work that, in a monetary production economy, will be indirectly related to public policies”

But they do not manage to connect the macro and the micro sphere at all. They are advised to read the Levy Institute work on ‘time poverty’, like this paper (Why time deficits matter. Implications for the measurement of poverty) which even is about the same Mexico they write about. And probably this paper, also from the Levy institute, ‘The Impact of Public Investment in Social Care Services on Employment, Gender Equality, and Poverty’ (I did not read the last one but found it when I went to the Levy Institute website – there is of course much more). If they were my students (who always hate such advises – they rather stick to their books) I would advise them to go to at least some women in preferably poor neighbourhoods first, to talk with them about such subjects.

Komura and Ogawa do not even start well. Their subject is tantalizing – but they do not even really define it. Any kind of historical or institutional or even statistical detail about the momentous declines of fertility in Asia is lacking (or should we count the fact that they do not use the (literally) immortal single heshe representative consumer in their model but accept that the world consists of women and men who beget children as ‘institutional detail?). Liteature about this is not used. They may have a good reason for not looking at the real world, as they state (quote): ‘If a country who experiences the capital inflow enjoys higher female wage and lower fertility rate, the country with capital outflow may do opposite situation.’ Which implicates that the fertility rate in Germany must have been quite a bit lower fertility rate than Portugal, Spain of Greece, before 2008. Quod non. In all cases fertility was and is way below the reproduction rate. In a theoretical sense their article is also severely wanting: they use neoclassical theory which (1) mixes up financial capital with the stock of  physical capital while (2) the authors do not make a distinction between physical capital used for monetary production and physical capital (houses but also consumer durables) used for non-monetary production and (3) they do not account for the fact that our estimates of capital are, by necessity, messy and convoluted as we sometimes have to use market prices to value capital while in other cases we have to use historical production costs or replacement value.

Ad 1: The authors suppose that lending to foreign countries (exporting financial capital) leads to a decrease of the domestic stock of capital. Quod non. When domestic banks lend to a foreign country do not export the domestic stock of houses or roads or machinery – the authors however continually suppose that this is the case.

Ad 2:  fertility is, according to the authors, the result of bargaining between men and women, bargaining which is based upon the male and female wage rate which, in its turn, is based upon the amount of capital available for male and female market activities (hey, whatever happened to the government?). Higher female wages lead to less children, according to this idea, as it makes household production (i.e. raising children) less attractive compared with earning money. But what if as shown by the statistical data an increasing amount of our financial as well as real capital is not used for market (or government) production but for household production? This should raise theoetically the productivity of physical household production – children become more valuable and wanted because house prices increase (which is the implication of the model of the authors). But though children may have an ex post monetary shadow price (duhhh…), they does not really have an ex ante market price, which is a conditio sine qua non for markets to function. Which means that the market based idea of fertility decision flounders as there are not market prices to compare.By the way – what single parents really need to raise children is a reasonable amount of money (believe me, I know). Which means that in a divorce prone world higher female wages (i.e. the possibility to be independent) might be beneficial to fertility. And oh, this idea, inherent in the neoclassial model used, that men are utterly, utterly unable to do any kind of household chores…

Ad 3: do house price bubbles really lead to higher household productivity and therewith higher fertility? The increase in the amount of capital (% of nominal GDP) as estimated by economists is largely (wrong: totally) the consequence of higher house prices, not of more or better houses, incrases which to quite an extent were enabled by exports of capital from one country to another of, aided by securitization of debts, bank-money printing. Should we impute this higher value of capital into our household production function? Or, more recently: do the house price declines lead to lower monetary household productivity? The authors do not even seem to be aware of the possibility that such questions can exist.

Aside – to get a good idea of household production, fertility and productivity as well as decisions about household production the authors are advised to watch the movie Narayama.

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